Marwyn Value Investors Limited Unaudited interim results for the six month period to 30 June 2014 Marwyn Value Investors Limited Contents Investment policy and performance summary 1 Report of the Chairman 2 Report of the Manager 4 Directors’ responsibilities 12 Condensed statement of comprehensive income 13 Condensed statement of financial position 14 Condensed statement of cashflows 15 Condensed statement of changes in net assets attributable to equity holders of the Company 1 6 Notes to the financial statements 17 Risk 22 Advisers 25 Marwyn Value Investors Limited Investment policy and performance summary Investment Objective Performance Summary The investment objective of Marwyn Value Investors Key performance features for the six months ended 30 Limited (LSE: MVI) (the “Company”) is to maximise total June 2014 are as follows: returns on its capital primarily through the capital appreciation of its investments. Ordinary Shares The Company is listed on the Specialist Fund Market of the London Stock Exchange. The reported Net Asset Value (“NAV”) of the Ordinary shares increased by 12.17% during Investment Policy the period, compared with an increase in value of the FTSE All Share Index (ex The Company seeks to achieve its investment objective by Investment Trusts) of 0.32% over the same investing up to 100% of its available capital into Marwyn period. The reported NAV has increased by Value Investors LP (the “Master Fund” or the “Fund”) 229.17% since inception, compared with an through the acquisition of limited partnership interests in increase in value of the FTSE All Share Index the Master Fund. The capital of the Company’s Ordinary (ex Investment Trusts) of 21.47% over the share class is invested in Class F partnership interests of same period; the Master Fund and the capital of the Company’s B Ordinary share class is invested in Class B1 partnership The reported NAV figure includes a liquidity interests of the Master Fund. discount in respect of the investment in the Master Fund, as required by IFRS. The actual NAV The Master Fund's investment strategy is to identify, stated by the Company in its NAV statement, support, invest in and work alongside experienced which does not include a liquidity discount, operational managers with strong and demonstrable increased by 12.46% over the period and has track records for building and managing small and mid- increased 275.17% since inception; cap UK, European and North American businesses, combining a mix of private equity and public market B Ordinary Shares disciplines to create value. In so far as it relates to the Ordinary shares, the Master The reported NAV of the B Ordinary shares Fund is permitted to make investments in new portfolio decreased by 3.97% during the period. The companies. The Master Fund may not make not make reported NAV has decreased by 55.18% since investments in new portfolio companies in relation to the inception. B Ordinary shares. As with the Ordinary Shares, the reported NAV The Manager figure includes a liquidity discount as required by IFRS. The NAV for the B Ordinary shares stated by Marwyn Asset Management Limited (the “Manager”), the the Company in its NAV statement, which does manager of the Master Fund, also acts as manager to the not include a liquidity discount, decreased by Company. The Manager is advised by Marwyn 3.51% over the period and 51.60% since Investment Management LLP (the “Investment Adviser”) inception. in respect of both the Company and the Master Fund. The Management Agreement between the Manager and the Master Fund allows for the investment strategies that the Manager may employ on behalf of the Master Fund to be in any securities, instruments, obligations, guarantees, derivative instrument or property of whatsoever nature in which the Master Fund is empowered to invest and as contemplated by the Investment Policy. The Company does not pay a management fee or performance fee to the Manager in respect of the Company’s investment in the Master Fund. The valuation of the Company’s investment in the Master Fund takes into account the management fee and performance fee payable by the Master Fund that is applicable to the classes in which the Company invests. 1 Marwyn Value Investors Limited Report of the Chairman I am pleased to present to the shareholders the annual report in accordance with the Codes. unaudited interim results of the Company for the six months ended 30 June 2014. The Board has considered the requirements of the Foreign Account Tax Compliance Act (“FATCA”) and Ordinary shares associated jurisdictional requirements and has appointed the Manager as its Sponsor in this regard. The Manager The operations of the Master Fund’s underlying portfolio will be responsible for ensuring ongoing compliance. companies continued to perform well during 2014 and this has been reflected in the overall performance of the Master Fund Facility NAV, as detailed later in my report. As previously announced in June, the Master Fund has The Company has adopted a distribution policy which entered into a £45 million secured revolving credit includes a return of capital pursuant to the new facility with Credit Suisse (“Facility”) to refinance its progressive distribution policy for holders of Ordinary previous facility which was due to expire on 16 February shares. This will result in a minimum return of capital in 2015. The Facility is not allocated to any particular class January of each year. The first return of capital of interests in the Master Fund and may be used to make completed in January 2014 was equal to 8 pence per investments for any class open for investment and for Ordinary share, effected by way of a partial cash general corporate purposes. It has a three year term and redemption of the Ordinary shares. Further information is repayable in full at final maturity. Drawdown under regarding the annual return of capital is contained in the Facility is subject to certain covenants and other Note 9 to these unaudited interim results. conditions precedent. The amount currently available for drawdown is approximately £18.8 million. Pursuant A detailed review of the performance of the portfolio to the Facility, a commitment fee of 0.5 per cent. is companies is set out in the Report of the Manager. payable on all undrawn amounts and interest at a rate of 3 month LIBOR plus 2 per cent. is payable on all drawn B Ordinary shares amounts. The financial performance of the Master Fund’s underlying portfolio companies related to the Company’s Outlook B Ordinary share class has stabilised, having fallen behind The Board believes that there is potential for further their forecast figures in recent years. The share price of growth in the NAV of the Ordinary shares. The Board also Fulcrum Utility Services Limited has increased by 8.7% believes that the Company offers a unique and attractive over the period. We believe that there is potential for proposition for investing in actively managed investment future growth in the NAV attributable to the B Ordinary opportunities and acquisition-led growth strategies in shares over the remainder of the year. The performance selected industries. Accordingly, the Board further of the of the B Ordinary shares is set out on the next believes that the Company is well placed to continue to page of my report. deliver significant investment returns to Ordinary shareholders. A detailed review of the performance of the portfolio companies is set out in the Report of the Manager. As noted in the Circular, the Board believes that the benefits of the recent restructuring of the Ordinary share Discount class should enhance the appeal of the Company’s Ordinary shares to investors and, accordingly, should The Manager, together with the Board and the attract market support for the shares over the medium Investment Adviser, continues to monitor the discount of to long term which should in turn lead to an the share price to the Company’s NAV in both share improvement in the rating and liquidity of the Ordinary classes on a regular basis as we are committed to shares. exploring, and where appropriate pursuing, every avenue in order to the narrow the discount. The Board is aware that the NAV and share price of the B Ordinary shares have not performed well in recent years. As at 30 June 2014, before adjustment for the liquidity The Board, together with the Manager, will continue to discount, the discount to NAV of the Ordinary Shares was explore ways to improve this performance 35.73% and of the B Ordinary Shares was 29.19%. The discounts, after adjustment for the liquidity discount, are 26.75% and 23.54% respectively. New Applicable Legislation Certain disclosures are required to be made to investors on an annual basis pursuant to the Codes of Practice for Alternative Investment Funds and AIF Services Business (the “Codes”) as required under the licence held by the Manager. The Company’s audited Financial Statements for the twelve months ended 31 December 2014 will include all relevant disclosures that would constitute an . 2 Marwyn Value Investors Limited Report of the Chairman Performance of Ordinary shares – After liquidity adjustment The NAV per Ordinary share of the Company (after liquidity adjustment) increased during the period by 27.7p to £2.556, an increase of 12.17%. As at 30 June 2014, the discount of the share price to NAV per share was 26.75%, an increase over the period from 19.9% as at 31 December 2013. NAV % FTSE All Share FTSE Small MSCI (Ex - IT) % Cap % Europe Net (€) % Period (to 30/06/2014) +12.17% -0.32% +0.26% +6.15% Since inception 1 (1/3/2006 to 30/06/2014) +229.17% +21.47% +24.41% +31.56% Performance of B Ordinary shares – After liquidity adjustment The NAV per B Ordinary share of the Company (after liquidity adjustment) decreased during the period by 1.7p to £0.412, a decrease of 3.97%.